Wrapping up the 2006 processor prices story - UPDATE

Mark Raby, 30th December 2006

It is our final processor price/performance article of the year - and what a year it was! 2006 not only saw dual-core processors entering the mainstream, it was also a year of new milestone releases and fierce price battles. In short, the heart of your computer deserves your attention again.

As our last installment for 2006, we're going to take a look at the big shifts that happened this year, how we got to where we are today and what we can expect for 2007.

If you look back at the beginning of this year, you may remember that AMD was dominating the performance charts and what we call today power-efficiency disciplines. Intel's Core Duo was launched during CES as the firms second 65 nm processor and the Core 2 Duo family (Merom, Conroe, Woodcrest) started to gain shape.

It was a very interesting time as Intel was convinced that it would take back the performance crown and had been talking about that claim quite openly since the Fall IDF in 2005. AMD on the other hand, at least publicly, said that Intel would not be able to surpass its Athlon X2 dual-cores in terms of performance and even told us that the company would not have to react to the release of Core 2 Duo.

In fact, it came a bit different, as Intel launched a huge offensive in processor pricing, dropping its Pentium D 800-series and 900-series dual-cores into mainstream and entry-level price areas. AMD, which had just established a credible position in processor price segments above $400, was forced to drop its prices by almost 50% to remain competitive.

Pricing trends in 2006

This price-drop marked the beginning of our price-performance analysis series, which preceded the introduction of Intel's Core 2 Duo processor by just a couple of days. What we saw in the following weeks and months was a continuous price battle between AMD and Intel: AMD tried to support the prices of its processors below the performance scale of Intel's Core 2 Duo processors, while increasing availability of Core 2 Duo chips increased the pressure on AMD from the top. While most of the currently available chips have settled in their areas, the dynamics across the map are still in full swing today, especially with the new round of Core 2 Quad versus the new FX dual-socket processors.

After we had received details about Intel's powerhouse QX6700 processor, we began scrutinizing processor pricing again, with our current weekly format beginning on October 6. Since then, we've tracked prices for 27 processors. Chiming in with the highest average price over those 13 weeks is the QX6700, at $1153.23. On the low end is the Pentium D 805, showing an average price of $102.62. 15 of the processors have shown more week-to-week price increases than decreases, eleven had the opposite trend, and on had an equal amount of price drops and price jumps.

Excluding the new FX processors, the processor with the overall most volatile price was AMD's FX-60, logging a significantly higher standard deviation than any other processor, with an average absolute value of change of $13.69 per week.

The biggest price fall we recorded happened this week, with a stunning $350 drop in price for the dual-socket FX-74. The 4400+ saw the most drastic week-to-week price increase, with a $145 week-to-week jump last month. The processor with the longest-holding record low price for our weekly charts is the Extreme Edition 965, which we have yet to see dip below the $1050 price we recorded on October 13. On the other side, Intel's E6600 and D840, and AMD's 5000+ and 4200+ are the only ones to have never risen above our original recorded prices from October 6.

Read on the next page: Processor prices: AMD FX price drops fall

Processor prices: AMD FX price drops

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The pressure seems to have finally made a dent in Intel, with an overall average drop in price in its processors for the first time in over a month. The Pentium D 940 has been leading the matching price decrease trend for Intel, as the only Intel processor that has been constantly dropping with AMD, over the past five weeks.

More significant Intel's price drops, though, is the drastic decline in pricing for the top three AMD processors, the FX-70, 72, and 74 (all part of AMD's dual-socket "DSDC" product family). In a similar turn of events to what happened the week after Intel's QX6700 was first released, prices fell drastically from the initial level. And with the exception of the two processors that went up in price this week, the FX-62 and FX-60, pricing of every one of these AMD processors reached all-time lows since we started this feature on October 6.

Read on the next page: Dissecting the pricing trend

Analysis: Dissecting the pricing trend

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Now we can really get an almost full comparison to AMD and Intel on the higher end, and it appears like the intersection between the two continues to move to the right, giving AMD a better average performance-per-dollar ratio for a longer scale than we've previously seen.

Intel remains the hardware maker to offer the highest performance with the most value, but for anything that offers up to 1.8 times the performance of a Pentium 4 520, AMD looks to be the better bet.

The new pricing levels for the high-end FX processors helped AMD's correlation, as it set a new all-time high for us, reaching 0.973, a nearly perfect relationship between price and performance.

Intel also saw an increase in correlation, after it dipped over the past two weeks. This week it logged a correlation of 0.619, a 1.9% jump from last Friday's 0.607.

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With the highly overpriced Extreme Editions and other Pentium processors, Intel's overall trendline is of course inflated on the low end. However, when we break it down, we see that the Core 2 processors still take their dominance over AMD, though at AMD's very high end, it touches the Core 2 curve, the first time we've seen it do so. If AMD's processor prices drop yet again next week, we could see some real pressure on Intel.

Correlation for these curves are 0.777 for the Pentium processors, down marginally from last week, and 0.927 for the Core 2 side, up from last week's 0.915.

As the final price/performance article for 2006, we have included in the following pages individual graphs for every processor, with our recorded average e-tail prices over the past 13 weeks. Since we only have two weeks of pricing data for the FX-70, 72, and 74, however, they are not included in the following set of graphs.

Read on the next page: Pricing trends: Intel

Pricing trends: Intel dual-core processors

As we get ready to bring these articles to the new year, we would like to encourage our readers again that we appreciate all feedback, comments, and suggestions. Simply click on the author's name at the top of any page and let us know what you would like to see in the 2007 installments of our processor price/performance updates.